Raya Brewery Share Company signed, on November 18, a Memorandum of Understanding (MoU) with BGI Ethiopia for a 30 percent share of their firm, worth 75 million birr. They also agreed with a major shareholder, Dawit Gebregziabher, to increase his shares to 52.5 million birr. He previously had ten million birr in shares.
According to Lemma Bekele, General Manager of Raya Brewery S.C., the company has so far sold 217.5 million birr worth of shares from the 250 million birr shares it had planned to sell and has presented a proposal to the Commercial Bank of Ethiopia (CBE) for a 482 million birr loan.

The new money will go towards construction of a factory estimated to cost around 732 million birr.

Previously Raya Brewery was in negotiations with German Firm Brewtech S.E. for the acquisition of some of its shares but subsequently failed to reach an agreement. They are still a candidate to provide technology and equipment.

The factory’s initial plans are to produce 300 thousand hectoliters of beer every year covering 10-15 percent of the market and after few years to add another 60 thousand hectoliters. They eventually hope to brew 600 thousand hectoliters. Estimates for beer demand growth are envisaged to reach 5.2 million and 7.2 million hectoliters in the years 2013 and 2016 respectively.

Lemma said in less than a month, the company will open a turnkey tender for the construction of the factory.

The factory is expected to be operational 18 months after construction begins, which is expected to be in the middle of the current fiscal year.

Lemma also said Raya Brewery has received the provisional design map of the land expected to be 15-18 hectares and located about 660Km north of Addis Ababa in Maichew area around one kilometer from the city and in front of the Addis Ababa Mekelle highway. The factory’s water source will be from spring water nearby.
Lemma further added that since the highlands of the area produce barley, the factory also has plans to produce barley beer.

The company’s plan for the factory’s malt source for now however would be the sole malt factory in Ethiopia; the Assela Malt Factory, although another one is expected soon from Dashen Beer Company.

New malt factories will help phase out imported malt which will in turn save hard currency.

Lemma said the factory would benefit the local population because it will employ at least 300 permanent employees. It plans to target the northern part of the country and provide non-alcoholic beer as well.

Lemma believes the beer market will continue to expand in Ethiopia. He says Ethiopia’s per capita beer consumption is about four litres and the increasing population and infrastructure increases the untapped potential.

Raya Brewery was formed in March 2010 by 58 shareholders with a capital of 2.36 million birr. It now has 2,022 shareholders. The company plans to produce, in its first stage, draft and bottled beers but plans to diversify to premium brand beer eventually.

One challenge Lemma talked about was the lack of bottles for the beer. They plan to import the bottles primarily from Egypt should a shortage occur.

The company has prominent shareholders among its ranks including: Yemane Kidane (Jamaica), former Chief of Staff at the Ministry of Foreign Affairs, Selome Tadesse former Spokes Person for the Ethiopian Government during the Ethio-Eritrea war and former general manager of the Ethiopian Radio and Television Enterprise, and Zafu Eyesuswork president of the Ethiopian Chamber of Commerce and Sectoral Associations (ECCSA) and former general manager of the United Insurance S.C.

CapitalEthiopia